COMPANIES ACT,2013 CARO 2015 - PowerPoint Presentation

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COMPANIES ACT,2013CARO 2015

Advocate Arun Saxena

Saxena & Saxena Law Chambers

Advocates & Attorneys

603-604, New Delhi House,

27,

Barakhamba

Road,

New Delhi – 110 001.

Ph: 43044999, Mob.: 9810037364

E-mail : advisor@sslclegal.in

CARO 2015 2Saxena & Saxena Law ChambersEffective

On the date of publication in Official Gazette

Applicability

w.e.f

. financial year commencing on or after 1

st

April

2014

CARO 2015Exceptions: Banking companyInsurance companySection 8 companiesOPCSmall companiesPrivate companies Capital and reserves not > Rs.50.00 lacs and

Outstanding loans not > Rs.25.00

lacs

and from financial institutions and banks

Turnover not > Rs.5.00

crores

3

Saxena & Saxena Law Chambers

Matters to be included in Auditors Report 4Saxena & Saxena Law Chambers

Matters

Changes

in new CARO

(

i

)

Fixed

assets:-Maintenance of records

Physical verification

Whether on reasonable intervals.

Discrepancies found

Detail within books of accounts

Requirement

to report disposing off of substantial part of fixed assets during the year has been done away.

(ii)

Inventories:-

Physical verification

Procedure (adequate/ reasonableness)

Maintenance of records

Material Discrepancies

Detail within books of accounts

Same provision

Matters to be included in Auditors Report 5Saxena & Saxena Law Chambers

Matters

Changes

in new CARO

(iii)

Loans given:-

Unsecured or secured loans

Companies/firms, other parties covered in ledger maintained in section 189

Whether repayment and interest is regular?

Overdue more than Rs.1.00

lac

to be reported.

Steps taken by the company for recovery.

Reporting on

loans taken by company not required. Reporting on rates charged on loan given not required as company shall charge as per Section 186(7)

Matters to be included in Auditors Report 6Saxena & Saxena Law Chambers

Matters

Changes

in new CARO

(iv)

Internal

control system:-

For purchase of inventory

and fixed assetsSales of goods and services

adequacy

Commensurate with size and nature of business

Whether there is continuing failure to correct major weakness in internal control system

Reporting on adequate internal control procedure

for sales of services is also included.

Matters to be included in Auditors Report 7Saxena & Saxena Law Chambers

Matters

Changes

in new CARO

(v)

Deposits:-

Compliance of provision of section 73 to 76

Compliance of directions of RBI

Compliance of order passed by CLB and CLT, RBI

Nature of contravention to be reported.

Same

provision

Matters to be included in Auditors Report 8Saxena & Saxena Law Chambers

Matters

Changes

in new CARO

(vi)

Cost

records:-

Maintenance of cost records u/s 148Whether company has maintained such records or not?

Same provision

Matters to be included in Auditors Report 9Saxena & Saxena Law Chambers

Matters

Changes

(vii)

Statutory Dues:-

Has the

company is regular in depositing

undisputed statutory dues relating to PF, ESI, income tax, sales tax, wealth tax, service tax, custom duty, excise duty, VAT and

Cess etc.

Extend of arrears at the last date of financial year (outstanding for more than six months).

If dispute relates to income tax, sales tax, wealth tax, service tax, custom duty, excise duty, VAT and

Cess

. The amount involved and forum where dispute is pending be reported.

Whether amount required to invest education fund has been transferred or not?

Whether

amount required to be transferred to investor education fund has been transferred within time.

Matters to be included in Auditors Report 10Saxena & Saxena Law Chambers

Matters

Changes

in new CARO

(viii)

Accumulated

losses:

Not less than 50% of

networth

Cash losses in financial year or in preceding financial year

(for companies registered for not less than 5 years)

Same provision

(ix)

Dues of financial

institutions, banks/ debenture holder:-

Default in repayment of dues

Means of default be mentioned

Same provision

Matters to be included in Auditors Report 11Saxena & Saxena Law Chambers

Matters

Changes

in new CARO

(x)

Guarantee

given:

For guarantee given, for loan taken by others

from banks and financial institutions.Whether terms and conditions are prejudicial in the interest of the company?

Same provision

(xi)

Term loans:

Whether

utilised

for the purpose for which loans were obtained.

Same provision

Matters to be included in Auditors Report 12Saxena & Saxena Law Chambers

Matters

Changes

(xii)

Fraud:

Committed or not by company

Notice by the auditor

Nature and amount to be reported. However, rule 13 of companies audit and auditors rule 2014 prescribed. The responsibility and duty of the auditor to report the fraud to the Central Govt. also. If he has reason to believe during the course of audit that the offence of the fraud has been committed/ being committed on the company by the officer or the employee of the

company.

Same provision

* Reasons for all

unfavourable

or qualified answers be given.

Matters no more required to be reported in CARO 2015 13Saxena & Saxena Law Chambers

Matters

Comments

(

i

)

Transaction entered by

company in which Directors are interested

2013, Act Mandates Audit Committee to review all related party transactions determining whether

these are on Arm’s length basis or not?

(ii)

Internal Audit System

Now, under Act, 2013 requirement to report on Internal Audit system is with directors

who are to report under Director’s Responsibility Statement u/s 134.

Matters no more required to be reported in CARO 2015 14Saxena & Saxena Law Chambers

Matters

Comments

(iii)

Record required

to be maintained by company (loan against pledge of shares or debentures)

The definition

of charge under Act, 2013 includes pledge of shares also. Auditor of company may assess the same by viewing relevant form.

(iv)

Compliance

of Special Statute Provision. (Chit fund /

Nidhi

Co.etc.)

Matters no more required to be reported in CARO 2015 15Saxena & Saxena Law Chambers

Matters

Comments

(v)

Record maintained by companies

dealing or trading in securities

(vi)

Details of fund received for short

term basis have been

utilised

for long term investment and vice-versa.

Matters no more required to be reported in CARO 2015 16Saxena & Saxena Law Chambers

Matters

Comments

(vii)

Preferential allotment and determination

of Arm’s Length Price

Act, 2013 require u/s 62(1)(c) valuation report to be obtained for preferential allotment

which takes care of price of issue.

(viii)

Creation of security

in respect of debentures issued.

(ix)

End use of money raised by public issue.

THANK YOU17Saxena & Saxena Law Chambers